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NCUA’s Final MBL Rule – What You Need to Know

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BY RYAL TAYLOE

If your credit union is in the small business lending arena, the National Credit Union Administration’s final MBL rule could prove a goldmine of opportunities. What changes are part of this regulation and how will they affect your credit union’s business lending program? Read on to find out.

Early last year, Debbie Matz declared 2015 the “Year of Regulatory Relief.”Matz, the Chairman of the National Credit Union Administration (NCUA), recently announced that she is stepping down from her post after nearly seven years at the helm.With the recent release of NCUA’s final member business lending (MBL) rule, Matz’s ambitious agenda has begun to bear fruit.

Despite strenuous objections from the banking lobby and recognition of the growth in credit union business lending over the past decade (Fig. 1), NCUA has enacted a far-reaching,albeit long-overdue,rule. The credit union industry has been largely supportive because the need for change was recognized by many business lending experts.

“I am encouraged to see that the agency took their mission seriously,”says Tony Lillie, chief credit officer of CU Companies, LLC, a Minnesota-based credit union service organization(CUSO), “by reinstating much of the flexibility that went away with RegFlex and introducing some discretion at the credit union level in areas such as loan-to-value ratios and construction and development limits.”

Indeed, several of these changes, most notably the removal of the personal guarantee requirement and loan-to-value limits, will offer new opportunities for credit unions in the small business lending arena. These improvements should open the door for credit unions to compete more effectively in lending to operating companies, thereby expanding the movement’s reach beyond its traditional focus on commercial real estate deals.

In this article I discuss the most important MBL rule changes and how they may affect your credit union’s business lending program. I also share some recommendations on how to use recent advances in technology to best manage your portfolio. In the process, I empower you to take full advantage of the flexibility of the new lending provisions.

This content is for CU BUSINESS eMagazine , Special Deal: 2 websites , and NEW! The Leadership Team Builder Group Subscription members only.
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